Case Study: Tesla, Inc. (TSLA)

As a seasoned stock trader, I’d like to share with you a real-life example of a successful trade I made on Tesla, Inc. (TSLA) in 2020. This trade demonstrates a combination of technical analysis and risk management.

Trade Setup

In early 2020, I noticed that TSLA was forming a bullish ascending triangle pattern on its daily chart. The stock had been consolidating for several weeks, and I believed it was poised for a breakout.

Entry

On February 3, 2020, TSLA broke out above the resistance level of $580.00, which was the upper trend line of the ascending triangle. I entered a long position at $585.00, with a stop-loss at $550.00, just below the previous support level.

Trade Management

As the trade progressed, I adjusted my stop-loss to lock in profits. On February 10, 2020, TSLA reached a new high of $650.00, and I raised my stop-loss to $620.00. This ensured that I would at least break even if the stock pulled back.

Exit

On February 19, 2020, TSLA announced its Q4 2019 earnings, which beat analyst estimates by a wide margin. The stock price surged to a new all-time high of $887.06. I decided to take profits and closed my long position at $850.00.

Results

This trade resulted in a profit of $265.00 per share, or a 45.3% return on investment (ROI). The trade duration was approximately 16 days, which is relatively short-term.

Key Takeaways

Technical analysis: The ascending triangle pattern provided a clear indication of a potential breakout.
Risk management: Setting a stop-loss and adjusting it as the trade progressed helped minimize potential losses.